sc presentation

Download SC Presentation

Post on 20-Mar-2017

64 views

Category:

Documents

0 download

Embed Size (px)

TRANSCRIPT

PowerPoint Presentation

Equity Valuation

FNCE 4409-001Amber BusbyAdrian FosterLane NodwellJade OsadchukJustin Tsang

OverviewCompany IntroductionManagement & ShareholdersMacroeconomic OutlookExternal & Internal AnalysisCompetitive Position Risks & EvaluationEquity Valuation MethodsRecommendation

Company Description Telecommunications FirmFounded in 1966Listed on TSX in 1983Consists of Multiple Divisions

Shareholders & Management AnalysisJR Shaws Family Owns Majority of Class A Shares16 Member Board of DirectorsIn 2013: Changes to MGMT StructureExpanding Product Offering Growth Strategy

Macroeconomic OutlookAccording to BMO Nesbitt Burns:GDP & Overnight rate: Forecasted IncreaseInflation: Forecasted DecreaseUnemployment: Stay Relatively the Same

Porters Five Forces

SWOT AnalysisStrengths

One of the largest communications companies in CanadaRecognizableWeaknesses

High employee turnoverLack of building customer loyaltyOpportunities

More Canadians adopting smart devicesIncreased demand for faster internet speedThreats

Lack of growth in populationThreat to market share

Competitive PositionOligopoly - Medium Differentiated, Medium Focused

https://www.shaw.ca/store/http://www.telus.com/en/bc/index.jsp https://www.rogers.com/consumer/home

MATURE INDUSTRY

Historical Performance - Shaw

Dividends2010 - $ 0.462011 - $ 0.772012 - $ 1.012013 - $ 1.082014 - $ 1.062015 - $ 1.14CAGR Dividend 19.90 % the past 5 yrs

Shaws Average Return was 6.33%https://ca.finance.yahoo.com/q/bc?t=5y&s=SJR-B.TO&l=on&z=l&q=l&c=T.TO%2C+&ql=1

RisksLoss of Pricing PowerSubstitution RiskTelevision RiskTechnological RiskISP RiskCRTC RiskMacroeconomic Risk

Risk EvaluationCOMPANYSYSTEMATICRISK (Beta)TOTALRISKANNUALIZEDRETURNSHAW0.9215.71 %6.33 %TELUS0.6313.37 %16.64 %ROGERS0.4416.24 %12.34 %TSX COMPOSITE1.009.67 %1.19 %

Price/ Earnings ValuationYear (Year End August 31)20112012201320142015Historical AveragePrice$18.32$17.35$22.81$25.64$25.76EPS (Diluted)$1.02$1.61$1.63$1.84$1.79Price/Earnings17.9610.7813.9913.9314.3914.21Growth EPS57.84%1.24%12.88%-2.72%17.31%2016 Forecasted EPS$2.10Shaw Communications November 2, 2015 Share Price ($)$27.14Historical P/E14.21Price ($) - Trailing P/E$25.44Price ($) Leading P/E$29.84Industry ComparablesP/EShaw Communications14.21Rogers 19.38Telus17.40* All numbers have been taken from Bloomberg Database

Residual Income Valuation 2014201520162017Beginning BVPS (Bloomberg)10.4713.416.47819.713Net Income/Share (Diluted EPS)1.841.9402.0462.158Less: Dividends Per Share (D)1.091.1381.1881.2410Change in Retained Earnings (EPS-D)2.933.0783.2353.399Ending Book Value Per Share13.416.47819.71323.112Net Income / Share1.841.9402.0462.158Less: Per-Share Equity Charge0.711960.9111.1211.340Residual Income1.128041.0290.9260.817V2015$15.85

FCFE Valuation FCFE = NI + NCC FCInv WCInv + Net BorrowingFCFE (in millions) = 880 +809 -1904 -97 + 921 = $609FCFE1 =$587.33 FCFE2=$566.43FCFE3 =$546.28FCFE4 (Terminal Value)=$14,375.77

NPV @ 6.8% = $13, 396$13,396 / 471 Shares OutstandingPrice/ Share = $28.44

Recommendation - Sell

November 27, 2015 Share Price: $ 27.37

RESIDUAL INCOME40%$15.85FCFE40%$28.44P/E 20%$29.84TARGET PRICE$23.69

Questions ??